The 1987 Act extensively reorganized the system, requiring the merger of some institutions, authorizing the mergers of others, and providing a new line of credit to guarantee bonds issued by the System. The legislation mandated the merger of two categories of banks, Federal Land Banks (FLBs) (which historically provided long-term financing to farmers) and Federal Intermediate Credit Banks (FICBs) (which historically raised capital for short and intermediate loans to farmers). The resulting institutions are called Farm Credit Banks (FCBs). Agricultural Credit Act of 1987, § 410, Pub. L. No. 100-233, 101 Stat. 1637, as amended, Pub. L. No. 100-399, 102 Stat. 999 (1988) (codified at 12 U.S.C. § 2011 note (Supp. 1989)). Each district within the Farm Credit System is served by a FCB.
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The FCBs exercise a degree of supervisory authority over the associations that operate within the districts. See 1987 Act, §§ 1.3, 1.5, Pub. L. No. 100-233, 101 Stat. 1568, 1622-24 (1988) (codified at 12 U.S.C. §§ 2011-2013).

Plaintiffs' arguments are not persuasive. The language of the policy statement is a slender reed upon which to argue that Congress mandated the granting of charter amendments. As discussed above, other sections of the Act make it clear that Congress delegated the authority to the FCA to approve or reject charter amendment applications in accordance with rules and regulations adopted by the agency itself. See 12 U.S.C. §§ 2071(b)(8), 2091(c). Thus, the Act does not clearly and unambiguously express a Congressional intent to mandate the approval of charter amendments.

Plaintiffs contend that the FCA has authority to grant charter amendments without regulatory or statutory restriction. AR at 1, 9. The Court agrees with plaintiffs' interpretation. Nevertheless, such an interpretation does not lead to the conclusion that approval is mandatory. As discussed above, Congress conferred a great deal of authority and discretion upon the FCA. The FCA can either approve or deny charter amendments as long as the action taken is not "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). Plaintiffs argue that the FCA's denial of their applications for a charter amendment constitutes an abuse of discretion. Plaintiffs seek an order from this Court directing the FCA to grant their applications.

The administrative record (AR) demonstrates that Buckeye and Fostoria fully presented the rationale for their applications to the FCA. AR at 2-68. Indeed, plaintiffs detailed the financial and management concerns which led them to conclude that conversion to an ACA would be inappropriate. AR at 2-3, 10-12, 26-27, 39-40. The FCA considered the positions of Buckeye and Fostoria and its competitor, Mid-America, before rendering its final decisions. AR at 45-47. Moreover, the FCA had issued policy statements on November 22, 1988, and January 6, 1989. AR, 67 & 68. In these policy statements, the FCA addressed situations in which overlapping territory results from the merger of other credit system institutions pursuant to Section 411 of the 1987 Act. The FCA concluded that when confronted with such a merger any association which was not involved in the merger could seek to convert to an ACA so as to compete with equal lending authority against the newly merged entity. By permitting such a conversion, an association that was not a party to a merger could obtain the same lending authority enjoyed by a merged entity. Thus, when confronted with a competitive threat from a newly formed ACA, the members of a PCA or FLBA can themselves vote to convert to an ACA.
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AR at 50-51. An association faced with such a competitive threat also has the option to merge itself with another entity to form an ACA. 12 U.S.C.§ 2279c-1.

Plaintiffs concede that these options are available. However, they assert that given their special circumstances resort to either of these options is inappropriate. See Letter from Leon Leiser to David Hill (Jan. 26, 1989), AR at 1-25; Letter from Leon "Joe" Leiser to James Thies (Feb. 3, 1989), AR at 26-27. Specifically, in support of their applications for charter amendments, plaintiffs stated that Fostoria decided not to convert or to merge into an ACA because of the federal "tax consequences." AR, at 3. Fostoria wished to maintain "its present structure as a non-taxpaying entity." AR, at 26. Buckeye, in the documents in support of its application for charter amendment, stated that because it shares a joint management with Fostoria conversion to an ACA would "present conflicts of interest for the joint management team." AR, at 3. As an additional basis for granting the charter amendment applications of Buckeye and Fostoria, plaintiffs stated that "significant economies" would result if the territories were expanded to become co-extensive. AR, at 3, 11.

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